The Department of Finance (DOF) has given government agencies one year to transfer their deposit accounts to government financial institutions (GFIs), as part of an ongoing streamlining under the so-called treasury single account (TSA) system.
Finance Secretary Cesar V. Purisima has issued Circular 003-2015 that details the transitory provisions for national government agencies (NGAs), government-owned and -controlled corporations (GOCCs) and local government units (LGUs) to comply with the revised guidelines on authorized government depository banks.
Under the department circular, all NGAs, GOCCs or LGUs maintaining accounts with other banks have one year from the effectivity of the circular to transfer all funds and cash balances to a GFI with a universal banking license and CAMELS rating of at least “3”.
During this period, NGAs, GOCCs and LGUs may maintain existing accounts with a noncompliant bank, but may not make further deposits.
Under Section 5.4 of Circular 001-2015, the agencies concerned will only be allowed to have bank accounts with other banks if the GFIs cannot provide the banking products and services, and there is no other accessible GFI within a 20-kilometer radius and when such an arrangement has security and safety implications.
“The requesting agency needs to submit an independent report or certification for the Philippine National Police confirming the existence of security risks,” the circular read.
For GOCCs and LGUs with deposits in other banks, a maintaining balance may be allowed for operating expense of up to three months, after having performed a cost-benefit analysis or up to the maximum deposit insurance coverage of the Philippine Deposit Insurance Corp. of P500,000, whichever is lower.
“All funds deposited shall be limited to operating funds, and no other deposits shall be maintained for special projects or investment purposes.
Any amount in excess of the authorized cash balance has to be transferred to any of the GFIs,” it said.
The department circular aims to increase operational efficiency and generate savings from treasury operations by
minimizing the operational impact among national government units.
For the bank, other than the GFIs, the DOF will recommend to the Bangko Sentral ng Pilipinas the cancellation of the authority to accept government deposits if one has already been granted or disqualified to act as a government depository for not more than one-year.
Once the period mentioned lapses and the bank is still unable to meet the requirements (licensed universal bank and a CAMELS rating of at least 3), NGAs, GOCCs and LGUs may request for one year extension.
If the request was disapproved, funds must be transferred to banks that meet the requirements.
Purisima said it is imperative for government deposits to be placed in the strongest government financial institutions to ensure that taxpayer money is safeguarded to the fullest extent.
“The ongoing implementation of the TSA System is a synergistic innovation that brings together government bank accounts into a single unified structure, improving our cash-management system by consolidating resources and optimizing its use,” he said.